How do you account for South African tax selling from the UK?

Question

We have an order from a South African company and a net price was agreed, we have now received the official order and the net price has been reduced to allow an addition of 14% tax that then takes the total including tax to our original net price! Can anyone advise us on the tax and how we account for this in the UK?

Answer

Hi Jonathan,

Thank you for your question. I’ve just approved it so you should hopefully receive some useful advice in response. I will try to get in touch with someone who can help and point them to your question.

Will

Answer

Hi Jonathan,
As Ann-Marie says you should be clear with what you have quoted by including the inco terms.

In this instance you have options still.
If you look back at your correspondence and you have agreed a “net” price, then its your price. What the customer pays for freight, duty,is on the incoterms. but the local vat ? that’s pushing it.
They may have a junior clerk creating the purchase order and they might locally think the net figure is after vat. hence may be an error.
Depends on the relationship.
My personal opinion ? if i had been pushed hard on price and this 14% was not in my calculations , i could not afford to let it go.
So if you really have no space for losing 14% margin points then i would go back and say there order form/price was an error and send your proforma showing your original quotation price and the right incoterms.
Then ask them to confirm it .
Gilio

Answer

Hi Jonathan,
As Ann-Marie says you should be clear with what you have quoted by including the inco terms.

In this instance you have options still.
If you look back at your correspondence and you have agreed a “net” price, then its your price. What the customer pays for freight, duty,is on the incoterms. but the local vat ? that’s pushing it.
They may have a junior clerk creating the purchase order and they might locally think the net figure is after vat. hence may be an error.
Depends on the relationship.
My personal opinion ? if i had been pushed hard on price and this 14% was not in my calculations , i could not afford to let it go.
So if you really have no space for losing 14% margin points then i would go back and say there order form/price was an error and send your proforma showing your original quotation price and the right incoterms.
Then ask them to confirm it .
Gilio

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